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Elizabeth Warren: U.S. middle class, once richest in world, has fallen behind other nations

Warren: Washington puts rich and powerful first and leaves working people behind

Minimum wage isn't enough to keep employed mom and baby out of poverty, she says

Warren: We strengthened the middle class before and can do it again by putting people first

A great crack in America's middle class came to light recently: While our country continues to lead the world as the richest nation, our middle class, once the most affluent in the world, has fallen behind. According to an analysis by The New York Times, Canada's middle class is now the wealthiest, and working families in many countries have seen their incomes rise much faster than those in the United States.

The hollowing out of America's middle class has been years in the making, but it wasn't inevitable that working families would fall further and further behind. Instead, it was the direct consequence of deliberate choices Washington has made over the past generation to put the rich and powerful first and to leave working people to pick up whatever crumbs were left behind.

It didn't have to be this way. America knows how to build a middle class that is the envy of the world. After the Great Depression, America made two critical decisions.

Elizabeth Warren

First, it put in place strong rules to level the playing field for families, putting more cops on the beat to monitor financial markets and passing basic safety rules to temper the boom-and-bust financial cycle.

Second, the country made building a future for our children the priority. We invested powerfully in our education system, and we made sure that people who worked full time would stay above the poverty line. We built infrastructure -- roads and bridges, our power grids -- so that we had the right foundation for businesses to build jobs here at home. We also invested in basic medical and scientific research, confident that if we built a great pipeline of ideas, our children would have opportunities their parents could only dream about.

These steps were aimed at building a strong middle class, and they worked. For a half a century, as the country got richer, our middle class got richer. America built a middle class that promised a bright future to each succeeding generation, a middle class that inched its way toward building opportunities, not just for some of our children, but for all our children.

Income inequality in America 24 photos

Income inequality in America 24 photos

Income inequality in America – In the early 20th century, industrial tycoons like the Rockefellers and Carnegies amassed fortunes in railroads, steel or oil. Here, a view of Cornelius Vanderbilt's residence in New York in 1908.

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Income inequality in America 24 photos

Income inequality in America – Wealthy passengers aboard a ship near San Francisco, circa 1910s. In this era, the top earners accounted for roughly 18% of the national income.

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Income inequality in America 24 photos

Income inequality in America – People gathered across from the New York Stock Exchange on "Black Thursday," October 24, 1929. The stock market crash of 1929, fueled by excessive speculation on Wall Street, set off the Great Depression.

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Income inequality in America 24 photos

Income inequality in America – Thousands of unemployed people waited in line to register for federal relief jobs in New York in 1933. The unemployment rate rose to 25% that year.

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Income inequality in America 24 photos

Income inequality in America – On September 12, 1935, Franklin D. Roosevelt and his staff met to find a solution to the economic crisis. FDR's New Deal policies tightened regulation of Wall Street, strengthened unions and set the top marginal tax rate for the rich at 90%.

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Income inequality in America 24 photos

Income inequality in America – A nurse takes care of children of migratory farm workers in Arvin, California, in 1937. The unemployment rate hovered in the teens. FDR created large-scale public work programs to provide jobs for the poor and middle class.

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Income inequality in America 24 photos

Income inequality in America – A plant in Toledo, Ohio, that made bombs. With the advent of World War II, demand for production of goods and services increased. By the mid-1940s, the unemployment rate dropped to less than 5%.

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Income inequality in America 24 photos

Income inequality in America – Labor unions benefited from FDR's policies and grew in power midcentury. Transit workers protested in New York on April 17, 1950. The Transport Workers Union threatened a strike if even one worker was punished for demonstrating.

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Income inequality in America 24 photos

Income inequality in America – Truck supervisor Bernard Levey with his family in front of their new home in 1950. The post-war period was a prosperous time for middle-class Americans.

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Income inequality in America 24 photos

Income inequality in America – From the 1950s to the 1970s, income inequality fell. Some economists call this period "The Great Compression." The median income at the time allowed a single earner to purchase a modest house and a car, support a wife and three children.

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Income inequality in America 24 photos

Income inequality in America – A worker at the Department of Motor Vehicles in Sacramento, California, in 1966. The feminist movement fought for equal pay for women, who were earning about 60 cents for every dollar earned by men.

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Income inequality in America 24 photos

Income inequality in America – In the 1970s, income inequality began to rise. The economy experienced wage and inflation problems, along with an oil crisis that caused a gasoline shortage. Here, a gas station in New York.

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Income inequality in America 24 photos

Income inequality in America – Post-1979 has been called the "Great Divergence." Some say that President Ronald Reagan's policy of supply-side economics, which reduced taxes for the rich, was a contributing factor.

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Income inequality in America 24 photos

Income inequality in America – Real estate tycoon Donald Trump with his Rolls Royce at his Mar-a-Largo property in Palm Beach, Florida.

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Income inequality in America 24 photos

Income inequality in America – The 138-meter (453-foot) yacht "Rising Sun" was purchased by Larry Ellison of Oracle, who has been one of the nation's highest-paid executives. From the 1990s on, CEO compensation greatly outpaced the average compensation of workers.

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Income inequality in America 24 photos

Income inequality in America – Home construction in Inverness, Illinois, in 2006. Risky mortgage lending was packaged by banks that sought to make big profits. The collapse of housing bubble instigated a credit crisis that triggered the global financial meltdown of 2007.

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Income inequality in America 24 photos

Income inequality in America – By 2007, the top 1% accounted for 24% of national income. Bernard Madoff, whose Ponzi scheme is one of largest financial frauds in history, made billions off hapless investors. Here, shoes that once belonged to Madoff.

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Income inequality in America 24 photos

Income inequality in America – Lehman Brothers, which collapsed in September 2008, filed for the largest bankruptcy in U.S. history. Major financial institutions were bailed out by the government with a massive amount of taxpayer money.

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Income inequality in America 24 photos

Income inequality in America – John Thain, former CEO of Merrill Lynch, doled out more than $4 billion in bonuses to employees. Despite the worst economic crisis since the Great Depression, Wall Street handed out $18.4 billion in bonuses for 2008, which is the "sixth-largest haul on record."

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Income inequality in America 24 photos

Income inequality in America – A job fair in March 2009. Unemployment rose to 10% during the Great Recession.

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Income inequality in America 24 photos

Income inequality in America – In September 2011, the Occupy Wall Street movement sprang up. The average income, adjusted for inflation, grew $59 from 1966 to 2011 for the bottom 90% of Americans.

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Income inequality in America 24 photos

Income inequality in America – Occupy Oakland protesters in California. In 2012, the income of the top 1% increased nearly 20% compared with a 1% increase for 99% of Americans.

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Income inequality in America – A suite at the Four Seasons Hotel in New York City costs $45,000 a night. Middle class Americans had a median household income of a little over $51,000 in 2013.

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Income inequality in America 24 photos

Income inequality in America – Today, the top 1% controls about 40% of national wealth. At a hearing in Washington D.C. about Wall Street and the financial crisis, protesters hold a placard depicting Goldman Sachs CEO Lloyd Blankfein, who once famously said, "I'm doing God's work."

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I lived this firsthand, growing up in a country that invested in its children. After my dad had a heart attack, my mom worked a minimum-wage job at Sears -- and that was enough to save our house. I went to a commuter college that cost $50 a semester, and my first husband worked on the moon shot. America was full of promise.

Investments in roads and bridges have nearly ground to a halt. And government research -- the great pipeline of ideas that led to the creation of the Internet, nanotechnology, GPS and a million medical advances -- has had its legs cut out from under it.

Today, the director of the National Institutes of Health says there's only enough money to fund one out of six National Institutes of Health research proposals, and our investments in scientific research don't reflect the values of a nation that plans to lead the world in new discoveries.

The impact of these policies has echoed through the economy. Big banks, powerful corporations and billionaires -- people who can afford to hire armies of lobbyists and lawyers -- have amassed more and more wealth. Meanwhile, the foundations of our once strong middle class have begun to crumble, and families have been caught in a terrible squeeze.

Starting in the 1970s, even as workers became more productive, their wages flattened out, while the costs of housing, health care and sending a kid to college, just kept going up and up. In 1980, the minimum wage was at least high enough to keep a working parent with a family of two out of poverty. Now, the minimum wage isn't even enough to keep a fully employed mother and a baby out of poverty -- and on Wednesday, Senate Republicans filibustered a bill to increase the federal minimum wage modestly.

We know how to strengthen the middle class in this country because we have done it before. We need a level playing field to make sure everyone follows the rules -- and that breaking the law has the same kinds of consequences for bank CEOs who launder drug money as for kids who get caught with a few ounces of pot.

We need to decide that our children -- not our biggest corporations -- are our first priority. We can take on the student loan problem that is crushing our kids, and to rebuild our roads and bridges, upgrade our power grids and expand our investments in basic research. And we can pay for that by putting an end to the tax loopholes and subsidies that go to powerful corporations and the wealthiest Americans.

We can repair the cracks in the middle class. We can strengthen our foundations and make sure that all of our children have a fighting chance. But it means changing who Washington works for -- and doesn't.